The Service Contract Act ("Act") is a labor standards statute for service contracts that "regulates the contractual relationship between companies that provide services to the United States and their employees." A to Z Maintenance Corp. v. Dole, 710 F. Supp. 853 (D.D.C. 1989) (Richey, J.). It provides that contracts must contain, inter alia, provisions specifying the minimum wage and fringe benefits to be paid to various classes of service employees by contractors. 41 U.S.C. § 351(a)(1) and (2). Under the Act, the Secretary of Labor determines the appropriate minimum wage and fringe benefit for employees based upon the prevailing rate for such employees in the locality. 41 U.S.C. § 351(a).

The Act also provides that, after a hearing, the Secretary of Labor may determine that the collectively bargained wage and fringe benefits in a particular service contract are substantially at variance with the prevailing wage and fringe benefits in the locality or are not the result of arms length negotiations. See 41 U.S.C. § 353(c).
*fn2"
In that event, the Secretary shall order that the wages and fringe benefits in the service contract at issue be changed to conform with the rates in the locality, as determined by the Secretary. 29 C.F.R. § 4.1b(a) (1992).

The Secretary of Labor has issued a variety of regulations pursuant to his or her authority under the Act. These regulations are included in Federal Acquisition Regulations ("FAR"). See 48 C.F.R. Subpart 1.1 (1992). Under the FAR, individual agencies may also promulgate regulations related to its own unique contracting needs, so long as the agency's regulations are consistent with the Act and the FAR.

The Plaintiff in this case challenges a GSA regulation promulgated under the FAR. The regulation provides that contractors must retroactively reimburse GSA for any wage or fringe benefit increases paid by GSA which are later determined by the Secretary to be at substantial variance with the prevailing wage and fringe benefits in the area or which have not been arrived at in arms length negotiations. 57 Fed. Reg. 22664-68 (1992), 48 C.F.R. § 552.222-43 (Alternate I) (1992). The regulation applies to all multiple year contracts and contracts with options. Id.

The Plaintiff contends that this regulation is arbitrary, capricious and contrary to law under the Administrative Procedures Act ("APA"), 5 U.S.C. § 706, and requests declaratory and injunctive relief as well as monetary damages.
*fn3"

III. THE PLAINTIFF HAS STANDING TO CHALLENGE THIS REGULATION BECAUSE THE ADMINISTRATIVE RECORD MAKES CLEAR THAT THE REGULATION WILL HAVE A NEGATIVE IMPACT ON THE WAGES AND FRINGE BENEFITS OF THE PLAINTIFF UNION MEMBERS.

The Defendants contend that the Plaintiff lacks standing to bring this action. The Court does not agree. For purposes of standing, a plaintiff must allege 1) a "personal injury" that is; 2) "fairly traceable to the defendant's allegedly unlawful conduct;" and 3) which is "likely to be redressed by the requested relief." Allen v. Wright, 468 U.S. 737, 751, 82 L. Ed. 2d 556, 104 S. Ct. 3315 (1984). It is undisputed that the regulation here is designed as a cost savings measure designed as an incentive for "effective negotiations" between service unions and federal contractors. Exh. 40, 57 Fed. Reg. 22665 (1992). While the Defendants contend that nothing in the regulation will affect a contractor's obligation to his employees under a collective bargaining agreement, id., any cost savings under the regulation can only be achieved at the expense of the union members whose wages and fringe benefits will be reduced by virtue of the regulation. Thus, there is a "distinct and palpable injury" that is "fairly traceable" to the regulation challenged here. Duke Power Co. v. Carolina Environmental Study Group, Inc. 438 U.S. 59, 73, 57 L. Ed. 2d 595, 98 S. Ct. 2620 (1978). The mere fact that causality may depend to some extent of the actions of a third party, in this case, the service contractors, is not a bar to standing. See International Ladies' Garment Workers' Union v. Donovan, 232 U.S. App. D.C. 309, 722 F.2d 795, 810-811 (D.C. Cir. 1983).

IV. THE REGULATION CHALLENGED HERE IS INVALID BECAUSE IT IS CONTRARY TO THE REGULATION PROMULGATED BY THE SECRETARY OF LABOR.

A. The regulation challenged here is contrary to the Secretary of Labor's expressed pronouncement that a new wage determination should apply prospectively.

Our website includes the first part of the main text of the court's opinion.
To read the entire case, you must purchase the decision for download. With purchase,
you also receive any available docket numbers, case citations or footnotes, dissents
and concurrences that accompany the decision.
Docket numbers and/or citations allow you to research a case further or to use a case in a
legal proceeding. Footnotes (if any) include details of the court's decision. If the document contains a simple affirmation or denial without discussion,
there may not be additional text.

Buy This Entire Record For
$7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.